The city of 50¶È»ÒÊÓƵ has given away for too long — roughly $709 million in tax breaks over 15 years — to attract developers. Supporters of the giveaways contend they’re the only way to get financed and that the city wins because the eventual tax revenue would not have been generated without abatements and incentives.
Does the city really need to prop up so many projects? If a developer can’t work out the finances without taking away future money for such necessities as public schools and public safety, perhaps the project can’t stand on its own merits of commercial viability. At the very least, the cash-strapped city must put limits and create a framework for spreading around the economic incentives. Neglecting less-stable neighborhoods while pushing development in vibrant areas continues to marginalize poor communities.
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An example is the in the Central West End, not a struggling neighborhood by anybody’s definition. The project was green-lighted last year and granted 10 years of 95 percent property tax abatement, and five years at 50 percent. Now the developer is negotiating for a break on sales taxes for construction materials. Where does it end?
Capping construction tax breaks in 50¶È»ÒÊÓƵ’ stronger neighborhoods and requiring the to review large projects are good measures under discussion to create guidelines for economic incentives. Alderman , 17th Ward, chair of the Housing Urban, Development and Zoning Committee, deserves credit for involving residents by holding public hearings to discuss the topic, which hasn’t happened regularly.
Reforming 50¶È»ÒÊÓƵ’ development incentives was a heated subject during the mayoral campaign, with most candidates favoring limited use in flourishing neighborhoods. Tax increment financing, or TIF, lets developers use property and sales taxes generated by their projects to finance construction. Tax abatements freeze property taxes for developers at current levels for years and exempt the owner from tax increases during that time.
More than half the money exempted by tax abatements would have gone to public schools, roughly $12 million a year or 3 percent of the schools’ budget. Without strong public schools to develop programs that help elevate student performance, it’s a struggle to attract middle-class families with children to the city. Isn’t that the goal of development after all?
When Mayor Lyda Krewson was the 28th Ward alderman, she was one of the most at using tax increment financing and abatements to attract developers into her ward. She was unapologetic during her campaign, saying that her job as an alderman was to work for her ward.
Now Krewson must put that muscle to work in every corner of the city. It’s essential to put a plan in place that benefits residents, not just developers.